In the matter of Media Corp International Pty Ltd (in liq) [2024] NSWSC 1477

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Media Corp International Pty Ltd (in liq) [2024] NSWSC 1477 Hearing dates: 24 October 2024 Date of orders: 24 October 2024 Decision date: 24 October 2024 Jurisdiction: Equity - Corporations List Before: Black J Decision: Orders in accordance with the short minutes of order, as amended. Catchwords: COPORATIONS – Application for order under s 588FGA of the Corporations Act 2001 (Cth) – Where preference by liquidator against the Commissioner of Taxation. Legislation Cited: - Civil Procedure Act 2005 (NSW), s 100 - Corporations Act 2001 (Cth), ss 588FF, 588FGA, 588FGB - Taxation Administration Act 1953 (Cth) Cases Cited: - Commissioner of Taxation v Moodie (2014) 308 ALR 571; [2014] NSWSC 59 - Noxequin Pty Ltd v Deputy Commissioner of Taxation [2007] NSWSC 87 Category: Principal judgment Parties: Commissioner of Taxation (Applicant) Tyron McGurgan (Respondent) Representation: Counsel: K Metlej (Solicitor) (Applicant)

Solicitors: Craddock Murray Neumann (Applicant) File Number(s): 2020/112749

Judgment – ex tempore (Revised 25 October 2024)

Nature of the application, chronology and affidavit evidence 1. By Interlocutory Process filed on 19 April 2024, the Commissioner of Taxation seeks an order under s 588FGA(4) of the Corporations Act 2001 (Cth) ("Act") that the respondent to the Interlocutory Process, Mr McGurgan, pay a specified amount and interest under s 100 of the Civil Procedure Act 2005 (NSW) ("CPA"), by way of indemnity of a preference payment recovered from the Commissioner of Taxation, in circumstances which I address below. 2. I should first set out the chronology of events and then turn to the affidavit evidence. By Originating Process filed on 15 April 2020, Messrs Tang and Kassem in their capacities as the joint and several liquidators of Media Corp International Pty Limited (in liq) ("Company") sought an order that the Deputy Commissioner of Taxation pay them the amount of $1,807,546, plus costs and interest, in respect of a voidable transaction by way of unfair preference involving a payment by the Company to the Commissioner of Taxation. 3. As I will note below, the liquidator and the Commissioner of Taxation ultimately agreed to consent orders which were made by the Court, and Mr McGurgan was given notice of the steps that were being taken to reach agreement and of the proposal to make those orders before they were made, and he was therefore allowed the opportunity to intervene in the proceedings and seek to assert any defence that may have been available to the liquidator's claim. As I will also note below, he did not do so. 4. The Court then made orders on 23 August 2021, by consent, which provided for the payment of $1,500,000 by the Commissioner of Taxation to the Company, on the liquidator's application. A schedule to those orders set out the manner in which that figure was calculated, and it included an amount of $1,094,341.38 which was referrable to a liability under Subdiv 16-B in Schedule 1 to the Taxation Administration Act 1953 (Cth) ("TAA"). 5. I have referred to the Interlocutory Process by which this application was brought above. The Court ordered that the matter proceed by way of Points of Claim and, in a succinct Points of Claim filed on 9 September 2024, the Commissioner of Taxation set out the basis of the application, namely, that the liquidator commenced the proceedings to which I referred above; an order was made referable to the amount to which I have referred above; Mr McGurgan was a director of the Company on the date when each payment was made to the Commissioner, which has now been recovered by the liquidator under s 588FF of the Act; and, by reason of s 588FGA(2) of the Act, Mr McGurgan is liable to indemnify the Commissioner in respect of the amount recovered, being the amount referable to Subdiv 16-B of Schedule 1 to the TAA. 6. Mr McGurgan was originally represented by a solicitor in respect of that application, but that solicitor filed a notice of ceasing to act on 12 October 2024, which identified both a residential or business address of Mr McGurgan and a last known email address. There is evidence that this application and relevant documents connected with it have been served upon Mr McGurgan at each of those addresses. 7. Turning now to the evidence in support of the application, the Commissioner relies on an affidavit dated 20 August 2021 of Mr Metlej, a solicitor acting for the Commissioner, which was presumably filed in respect of the liquidator's claim. Mr Metlej there refers to a company extract which indicates Mr McGurgan's role as director of the Company since 23 August 2022, and annexes correspondence which demonstrates that, as I noted above, Mr McGurgan was given notice of the Commissioner's intent to consent to orders in respect to the liquidator's claim against it; requested an opportunity to consider those claims, which it appears was given; was advised of the detail of the claims, and provided with a copy of the orders which were proposed to be and ultimately were made by the Court; and his solicitors responded, by letter dated 11 August 2021, by repeating an earlier request for access to documents, and indicating that Mr McGurgan did not have sufficient funds to meet any indemnity, which was disputed by him in any event. That correspondence makes clear that Mr McGurgan had an opportunity, as a third party to the liquidator's claim, to defend that claim where he would otherwise be prejudiced by an order under s 588FF which gave rise to a right to indemnity under s 588FGA, consistent with the expectation identified in the case law including Noxequin Pty Ltd v Deputy Commissioner of Taxation [2007] NSWSC 87 ("Noxequin") and Commissioner of Taxation v Moodie (2014) 308 ALR 571; [2014] NSWSC 59. In the event, Mr McGurgan did not take up that opportunity. 8. The Commissioner also reads the affidavit dated 17 April 2024 of Mr Carrigy, who is an Australian public servant employed in the Lodge and Pay section of the Australian Taxation Office ("ATO"). Mr Carrigy refers to the accounting systems maintained by the Commissioner; points to a company search which identifies that Mr McGurgan was a director of the Company since 23 August 2012, and therefore at all relevant times; points to the claim brought by the liquidators of the Company against the Commissioner of Taxation to recover the claimed preference and to the orders made by the Court in that respect; and sets out accounting records extracted from the ATO's computer systems which identified that part of the amount which the Commissioner was ordered to pay to the Company which was in respect of payments made by the Company in respect of a liability of the Company under Subdiv 16-B in Schedule 1 to the TAA. The figure there indicated, in the accounting records of the Commissioner, is consistent with the figure which was recorded in the orders made by the Court referable to the same matter. Mr Carrigy contends that, on that basis, Mr McGurgan is a person who is liable to indemnify the Commissioner in respect of the loss or damage which the Commissioner has suffered, referable to the amount which the Commissioner has been required to repay to the company pursuant to the orders made in the proceedings. 9. The Commissioner reads an affidavit dated 22 February 2024 of another solicitor acting for it, Ms Weber, which refers to service of documents relating to the proceedings upon Mr McGurgan, at the addresses to which I referred above, and which also indicates that the Commissioner's solicitors had advised Mr McGurgan that the Commissioner would seek a lump sum costs order in the proceedings, in the amounts set out in a letter dated 22 October 2024, reflecting a discount to costs then incurred and a further amount by way of disbursements. 10. Finally, by a second affidavit dated 23 October 2024, Mr Carrigy confirms the total amount payable to the Commissioner claimed under s 588FGA of the Act and confirms that no payments have been made and no credits have arisen which would have reduced that amount, and also calculates the amount of interest that is claimed under s 100 of the CPA in respect of that amount from the date on which the Commissioner's cause of action to recover the amount under s 588FGA arose to the date of the orders that are sought today.